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I had a pay stub request for a loan, I day trade so i pay myself.
Its a tough situation. I have been self-employed for about 5 years although my primary source of income is not from trading. During the first 2 years, I was denied left and right for every small little thing. But it got better after that and last year, I purchased a car for my wife and I was able to secure a loan based on my income tax records for the previous 2 years. Once your tax filings are in order you should be good for most purposes but until then I guess its going to be a bit tough. Sorry, not what you wanted to hear but it does get better once it starts showing on your tax records and you keep your debt to income ratio in check.
I'm self-employed and I've had similar experiences with the bank.
1. First and foremost, I have to tell you the words that you probably don't want to hear: withholding information about your income borders on credit fraud, and if you find yourself describing your trading profits as "$4k per month" on average without a tax return, chances are, you're being dishonest with yourself. I had that feeling once: I was a physics major in a very expensive city. In my sophomore year, I was looking for off-campus housing and I was asked to show a paystub indicating a monthly pay of 3.5x the monthly rent, or 6 months of a guarantor's bank account statement showing average balance exceeding 5 years of rent. I had neither - unlike my friends who went into consulting and tech internships, I was making a meager amount in the summer, and my parents had saved up for exactly 3 more years of college on the assumption that my scholarships/financial aid would pay off most of it. The natural instinct was to find not share this information and cook some paperwork describing my 'college fund' as a monthly salary somehow - but looking back, I realize that this instinct was really a manifest of the sub-consciousness that my family's finances were in bad shape.
2. Identifying yourself as a "self-employed trader" or "day trader" is going to make it much more difficult for you to obtain credit. This is a lesser issue for personal credit in my experience, but if you plan to start a disregarded LLC trading entity, trust me, incorporating an entity and starting a business relationship with a bank and describing your entity as a "trading firm", "hedge fund" or "investment adviser" is a death knell. At the first bank that I opened my firm's checking/savings account with, our business credit application actually failed right away with the rejection letter explaining that our personal guarantor's credit score was high but the type of business was the reason for our rejection. We switched banks quickly for service reasons, but at the second bank, the manager actually asked me if I could describe my business as something else. As an example, he said that there was a shop selling adult toys came in recently and had a quick credit approval for $200,000 in balances while a "trader" had $2,000,000 and a solid history and was rejected. My friend had $1,500,000 in liquid cash as average balance and was rejected for a $150,000 loan.
3. As pointed out, your mileage will vary with banks and type of credit application, so your best choices may differ from mine. In most cases, tax returns and an accountant's statement are your best line of defense. Certain banks, e.g. Silicon Valley Bank, are self-employment-friendly, and are easier to obtain credit at.
4. Brokerage PnL statements may work but I have only tried that once before, and to no avail - this was at an early stage when I did not have tax returns relating to partnership returns.
5. @Hulk's post above is the one I have to emphasize the most. The first 1-2 years of self-employment are the most difficult and there's nothing much you can do about it. My colleagues had the same experience. We had all just left considerably high-paying jobs, from reputable financial firms, with impeccable credit scores - but we couldn't get credit on our business using any of our credentials as a personal guarantee. We just locked up a significant amount of cash in secured deposit and built up our credit relationship.
Your bank relationship manager is there to help you and maintain your confidentiality. Besides, the people approving credit are in a completely different department. You should just be honest about your financial situation and ask what's the best strategy in your case, OK? If you are finding it difficult to do so, you need to find a new bank.
Also, about generating a paystub, first are foremost, I would recommend that a bona fide business entity with a federal tax identification number (EIN) exists before you do that, otherwise you could be identified as committing fraud. After you have an EIN, ADP or any other accounting software (QuickBooks, Advent) is common for creating a paystub. It seems that cost-savings are important, so you should honestly write yourself an offer letter and create your own paystub out of a free online template. In that case, do yourself a favor and create a nice looking logo (pick a nice font, it doesn't need a graphical component) and create a nice letterhead with business address and contact information in the footer - that helps a lot.
If you are asked further to prove that your business is bona fide, a strategy that has worked for me, was to show the official letters of engagement with my domestic and offshore lawyers and say that they represent us legally - those show some kind of documented proof that we had laid a $100,000 retainer and also no one likes to call up a huge law firm to accuse your business of being fake. This strategy has worked especially well when we tried leasing apartments/long-term hotel stays as 'agents' for our business.
In the UK you could in theory, setup a LTD company, then you pay yourself a hourly wage as a trader so it's a fixed wage then take that from trading profits, LTD Company rules mean your techincally employeed, but you'll need a company secretary and other expenses and you'll still need to build 2 years of history from that company.
:car: Owner operator as freight expediter. Banks want to see money owed to the government on tax return as proof of income. If you are pulling in 4 g's a month, you have the patience to save for decent wheels. Also look for the buy here, pay here that has service. They can get solid vehicles on repo. Best of luck.
